Ivey Branch Holdings, LLC, Ivey Branch Investors, LLC, Tax Matters Partner

United States Tax Court

T.C. Memo. 2025-63

IVEY BRANCH HOLDINGS, LLC, IVEY BRANCH INVESTORS,

LLC, TAX MATTERS PARTNER,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

__________

Docket No. 19189-19. Filed June 9, 2025.

__________

Kip D. Nelson, Vivian D. Hoard, and Meeren S. Amin, for petitioner.

Samantha L. Yantz, Rion A. Daley, Olivia H. Rembach, Rachel L. Greg-

ory, Laurel B. Stout, and Brian R. Cullin, for respondent.

MEMORANDUM OPINION

LAUBER, Judge: This case involves a charitable contribution de-

duction claimed for 2015 by Ivey Branch Holdings, LLC (Ivey Branch),

for the donation of a conservation easement. The Internal Revenue Ser-

vice (IRS or respondent) issued a Notice of Final Partnership Adminis-

trative Adjustment (FPAA) disallowing the deduction and determining

penalties. Currently before the Court is respondent’s Motion for Partial

Summary Judgment (Motion) contending that the IRS complied with

the requirements of section 6751(b)(1) by securing timely supervisory

approval of the penalties at issue. 1 We agree and accordingly will grant

the Motion.

1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C., in effect at all relevant times, and Rule references are to the Tax

Court Rules of Practice and Procedure.

Served 06/09/25

2

[*2] Background

The following facts are derived from the Pleadings, the parties’

Motion papers, and the Declarations and Exhibits attached thereto.

They are stated solely for the purpose of deciding respondent’s Motion

and not as findings of fact in this case. See Sundstrand Corp. v. Com-

missioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994).

Ivey Branch is a Georgia limited liability company that is a

treated as a TEFRA partnership for Federal income tax purposes. 2 Its

tax matters partner is Ivey Branch Investors, LLC (petitioner). Ivey

Branch had its principal place of business in Georgia when the Petition

was timely filed. Absent stipulation to the contrary, this case is appeal-

able to the U.S. Court of Appeals for the Eleventh Circuit. See

§ 7482(b)(1)(E).

Ivey Branch acquired a tract of land in Jefferson County, Georgia.

In 2015, after petitioner had solicited investors, Ivey Branch granted a

conservation easement over the property. Ivey Branch timely filed Form

1065, U.S. Return of Partnership Income, for its 2015 tax year, claiming

a charitable contribution deduction of $24.388 million for its donation of

the easement.

The IRS selected Ivey Branch’s 2015 return for examination and

assigned the case to Revenue Agent (RA) Maxim Naporko in the Large

Business & International Division. At that time Supervisory RA Karen

Carreiro (formerly Karen Carreiro-Smithson) served as Mr. Naporko’s

acting team manager and was thus his immediate supervisor.

During 2016 Susan Brown served as a TEFRA Coordinator for

the IRS. In that capacity she provided technical assistance to revenue

agents handling examinations of TEFRA partnerships. In April 2019 or

earlier, she began providing assistance to RA Naporko in connection

with his examination of Ivey Branch. Between April 5 and May 17,

2019, Ms. Brown and RA Naporko communicated regularly by email on

a variety of subjects. These subjects included the limited time remain-

ing before expiration of the limitations period, the possibility of securing

an extension of the limitations period, the existence of non-TEFRA

2 Before its repeal, the Tax Equity and Fiscal Responsibility Act of 1982

(TEFRA), Pub. L. No. 97-248, §§ 401–407, 96 Stat. 324, 648–71, governed the tax treat-

ment and audit procedures for many partnerships, including Ivey Branch.

3

[*3] adjustments for the partners, and the procedures governing asser-

tion of penalties.

In May 2019, as the examination neared completion, RA Naporko

recommended assertion of penalties against Ivey Branch under sections

6662 and 6662A. His recommendations to this effect were set forth in a

civil penalty lead sheet and Form 886–A, Explanation of Items. Copies

of both documents are attached to a Declaration he submitted in support

of the Motion. The lead sheet indicates that it was prepared by “Team

Member Maxim Naporko.” RA Naporko has averred under penalty of

perjury that he conducted the examination of Ivey Branch and that he

“made the initial determination” to assert the section 6662 and 6662A

penalties.

On May 13, 2019, RA Naporko sent the draft penalty lead sheet,

Form 4605–A, Examination Changes, and other workpapers to Ms.

Brown for review. Later that day Ms. Brown replied by email that she

had “added the penalties to the [Form] 4605-A and a reference to the

F[orm] 886-A in the remarks section.” She asked RA Naporko to provide

her with certain additional examination documents, which he did. On

May 17, 2019, she emailed RA Naporko to note that she had revised the

Form 886–A “to agree with the F[orm] 4605-A language for the penalty.”

During 2019 James Fee was a senior counsel with the Office of

Chief Counsel with responsibility for passthrough entities and “Global

High Wealth” matters. Ms. Carreiro asked Mr. Fee to review the draft

FPAA package prepared by RA Naporko. By email dated June 18, 2019,

she explained that it was “a short statute case,” with the limitations pe-

riod set to expire in September.

On July 11, 2019, Mr. Fee had a brief telephone conversation with

RA Naporko. On July 18, after reviewing the draft documents, Mr. Fee

emailed RA Naporko and Ms. Carreiro to say that he had “approved

[their] FPAA.” He added: “Please read my memo that recommends

changes to the penalty determination language” to ensure that the “writ-

ten manager approval covers those penalties for purposes of section

6751(b).”

On August 9, 2019, RA Naporko prepared an updated penalty

lead sheet, again recommending assertion of the section 6662 and 6662A

penalties. Ms. Carreiro, his team manager, digitally signed the penalty

lead sheet on August 12, 2019. Ms. Carreiro has averred under penalty

of perjury that she was RA Naporko’s “immediate supervisor,” that RA

4

[*4] Naporko “made the initial determination” that the penalties should

be asserted, and that she “personally approved, in writing, the initial

determination” to assert those penalties. On August 20, 2019, the IRS

issued petitioner an FPAA, including a Form 866–A, disallowing in toto

the $24.388 million deduction Ivey Branch claimed for the easement and

determining the aforementioned penalties.

Petitioner timely petitioned this Court for readjustment of part-

nership items. On March 12, 2025, respondent filed a Motion for Partial

Summary Judgment, seeking a ruling that he has sufficiently complied

with the section 6751(b) requirements for supervisory approval of all

penalties at issue.

Discussion

I. Summary Judgment Standard

The purpose of summary judgment is to expedite litigation and

avoid costly, unnecessary, and time-consuming trials. See FPL Grp.,

Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We may grant

partial summary judgment regarding an issue as to which there is no

genuine dispute of material fact and the movant is entitled to judgment

as a matter of law. See Rule 121(a)(2); Sundstrand Corp., 98 T.C. at 520.

In deciding whether to grant summary judgment, we construe factual

materials and inferences drawn from them in the light most favorable

to the nonmoving party. Sundstrand Corp., 98 T.C. at 520. But where

the moving party makes and properly supports a motion for summary

judgment, “the nonmovant may not rest on the allegations or denials in

that party’s pleading” but must set forth specific facts, by affidavit or

otherwise, showing that there is a genuine dispute for trial. Rule 121(d).

We conclude that no material facts are in genuine dispute and that the

question presented by respondent’s Motion may be decided summarily.

II. Analysis

Section 6751(b) provides that “[n]o penalty under this title shall

be assessed unless the initial determination of such assessment is per-

sonally approved (in writing) by the immediate supervisor of the indi-

vidual making such determination.” In a TEFRA case such as this, “the

Commissioner must secure written supervisory approval for the penalty

before issuing an FPAA to the partnership.” Palmolive Bldg. Invs., LLC

v. Commissioner, 152 T.C. 75, 83 (2019). If supervisory approval is ob-

tained by that date, our Court has held that the partnership must es-

tablish that the approval was untimely, i.e., “that there was a formal

5

[*5] communication of the penalty [to the partnership] before the prof-

fered approval [was secured].” See Frost v. Commissioner, 154 T.C. 23,

35 (2020).

Absent stipulation to the contrary this case is appealable to the

Eleventh Circuit, and we thus follow its precedent. See Golsen v. Com-

missioner, 54 T.C. 742, 756–57 (1970), aff’d, 445 F.2d 985 (10th Cir.

1971). The Eleventh Circuit has interpreted the term “assessment” to

refer to the “ministerial” process by which the IRS formally records the

tax debt. Kroner v. Commissioner, 48 F.4th 1272, 1278 (11th Cir. 2022),

rev’g in part T.C. Memo. 2020-73. The IRS thus satisfies section 6751(b)

“so long as a supervisor approves an initial determination of a penalty

assessment before [the IRS] assesses those penalties.” See Kroner v.

Commissioner, 48 F.4th at 1276.

Under a literal application of the standard enunciated by the

Eleventh Circuit in Kroner, supervisory approval could seemingly be se-

cured at any moment before actual assessment of the tax, which has not

yet occurred. But the Eleventh Circuit left open the possibility that su-

pervisory approval in some cases might need to be secured sooner, i.e.,

before the supervisor “has lost the discretion to disapprove” assertion of

the penalty. See id. at 1279 n.1; cf. Laidlaw’s Harley Davidson Sales,

Inc. v. Commissioner, 29 F.4th 1066, 1074 (9th Cir. 2022) (treating su-

pervisory approval as timely if secured before the penalty is assessed or

“before the relevant supervisor loses discretion whether to approve the

penalty assessment”), rev’g and remanding 154 T.C. 68 (2020); Chai v.

Commissioner, 851 F.3d 190, 220 (2d Cir. 2017) (concluding that super-

visory approval must be obtained at a time when “the supervisor has the

discretion to give or withhold it”), aff’g in part, rev’g in part T.C. Memo.

2015-42.

The record establishes that RA Naporko, who conducted the Ivey

Branch examination, made the “initial determination” to assert the pen-

alties. Respondent has supplied copies of the penalty lead sheet and a

declaration from RA Naporko averring that he “conduct[ed] the exami-

nation of [Ivey Branch]” and “made the initial determination” to assert

the section 6662 and 6662A penalties. The penalty lead sheet explicitly

states that it was prepared by “Team Member Maxim Naporko.”

The record establishes that Ms. Carreiro was RA Naporko’s “im-

mediate supervisor” at all relevant times. RA Naporko has averred un-

der penalty of perjury that Ms. Carreiro was his immediate supervisor

during the examination. Ms. Carreiro has likewise averred under

6

[*6] penalty of perjury that she was RA Naporko’s “immediate supervi-

sor” during the Ivey Branch audit. Her signature appears on the penalty

lead sheet, a copy of which is attached to her Declaration. We conclude

that Ms. Carreiro was RA Naporko’s “immediate supervisor” within the

meaning of section 6751(b). See Sand Inv. Co. v. Commissioner, 157 T.C.

136, 142 (2021) (holding that the “immediate supervisor” is the person

who supervises the agent’s substantive work on an examination); Park

Lake II, LLC v. Commissioner, T.C. Memo. 2025-11, at *2–3, *7–8 (hold-

ing that signature of acting team manager on a penalty approval form

satisfied the statutory requirements); Salacoa Stone Quarry, LLC v.

Commissioner, T.C. Memo. 2023-68, at *6 (same).

The record establishes that Ms. Carreiro timely approved the pen-

alties. She affixed her electronic signature to the penalty lead sheet on

August 12, 2019, using Adobe software. She stated that she was provid-

ing “written managerial approval for all penalties determined in the

FPAA, including those under §§ 6662(a), 6662(b)(1), 6662(b)(2),

6662(b)(3), 6662(e), 6662(h) (40%) and 6662A.”

The FPAA was issued on August 20, 2019. As of August 12, the

date on which Ms. Carreiro supplied her approval, the IRS examination

remained at a stage where she had discretion to approve or disapprove

the penalty recommendations. Therefore, under the reading of Kroner

most favorable to petitioner, the IRS complied with section 6751(b)(1) in

this case because Ms. Carreiro timely approved the relevant penalties

and did so in writing.

Petitioner challenges the status of RA Naporko as the officer who

made the “initial determination” to assert the penalties. Petitioner first

contends that Ms. Brown made the “initial determination” because she

reviewed RA Naporko’s draft FPAA package and “added the penalties to

the [Form] 4605-A and a reference to the F[orm] 886-A in the remarks

section.”

This argument strikes us as frivolous. Ms. Brown was a TEFRA

Coordinator for the IRS. In that capacity she provided technical assis-

tance to revenue agents, like RA Naporko, who were handling examina-

tions of TEFRA partnerships. The email traffic shows that she advised

him on several technical matters and answered questions he posed.

When he sent her the FPAA package on May 13, 2019, he had already

recommended the penalties described on the penalty lead sheet. Her

advice was purely technical in nature, designed to ensure that the FPAA

package met all formal requirements and that the penalty language

7

[*7] appearing in the various documents was consistent. She plainly did

not make the “initial determination” of any penalty.

Petitioner next contends that Mr. Fee, the Chief Counsel attor-

ney, made the “initial determination” because he recommended

“changes to the penalty determination language” in the FPAA. Again

we disagree. “Area Counsel must approve all FPAAs before issuance.”

Internal Revenue Manual (IRM) 4.31.2.7.2.5(1)(d) (May 10, 2019). As

the attorney assigned to review the draft FPAA, Mr. Fee had the respon-

sibility to determine whether that document was accurate. 3

When Mr. Fee reviewed the FPAA package in July 2019, RA Na-

porko had already recommended the penalties shown on the penalty

lead sheet. In his capacity as the reviewing Chief Counsel attorney, Mr.

Fee had no familiarity with the substance of the Ivey Branch examina-

tion. His advice, like Ms. Brown’s, was purely technical in nature, de-

signed to ensure that the FPAA package met all formal requirements.

Mr. Fee clearly did not make the “initial determination” of the

penalties at issue. As we have repeatedly held, the “initial determina-

tion of [a penalty] assessment” is a formal action by the Examination

Division directed to a particular taxpayer. See Belair Woods, LLC v.

Commissioner, 154 T.C. 1, 15 (2020). It is the duty of the examining

agent—here, RA Naporko—to determine penalties. See Cattail Hold-

ings, T.C. Memo. 2023-17, at *11. In her Declaration Ms. Carreiro

averred that she was the “immediate supervisor” of RA Naporko, that

“[he] made the initial determination,” and that she “approved the initial

determination.” As the “immediate supervisor,” Ms. Carreiro was obvi-

ously in a position to know who made the “initial determination” of the

penalties she was approving.

The record establishes that RA Naporko consulted with Ms.

Brown and Mr. Fee about the FPAA package, including the penalty rec-

ommendations that RA Naporko had set forth on the penalty lead sheet.

Such discussions among IRS officials do not constitute the “initial deter-

mination of [a penalty] assessment” within the meaning of section

6751(b). See Nassau River Stone, LLC v. Commissioner, T.C. Memo.

3 It is well established that it is among the duties of Chief Counsel attorneys

to advise revenue agents and review their work. See IRM 33.1.2.7.4 (June 2, 2014)

(dealing with Chief Counsel’s authority in reviewing Notices of Deficiency); id.

33.1.2.8(1) (Oct. 17, 2016) (“The role of the Field Counsel is to advise whether a defi-

ciency notice should be issued, and if so, to make recommendations concerning the

issues to be asserted . . . .”).

8

[*8] 2023-36, at *6–7 (citing Belair Woods, 154 T.C. at 9). The penalty

approval form, corroborated by the averments of RA Naporko and Ms.

Carreiro and other documentary evidence, establishes that RA Naporko

made the “initial determination” to assert the penalties set forth on that

form. Although petitioner dismisses these averments as “self-serving,”

it offers nothing but speculation to support its position. Such specula-

tion is not enough to establish a genuine dispute of material fact. See

Rule 121(d).

Finally, assuming arguendo that RA Naporko did make the “ini-

tial determination,” petitioner contends that Ms. Carreiro was not his

“immediate supervisor. Petitioner offers two theories to support that

contention. It asserts that the Secretary has designated a higher level

official—a Director of Field Operations—to approve penalties of the sort

involved here. Alternatively, it asserts that Ms. Brown may have been

RA Naporko’s “immediate supervisor” because she offered him technical

advice about preparation of the FPAA package.

Both arguments are frivolous. Section 6751(b) provides that the

initial determination of a penalty assessment must be approved by “the

immediate supervisor of the individual making such determination or

such higher level official as the Secretary may designate.” (Emphasis

added.) Suffice to say that the word “or” permits approval by either type

of official. See Goddard v. Commissioner, T.C. Memo. 2022-96, 124

T.C.M. (CCH) 187, 197. And Ms. Brown was not a member of the exam-

ination team, but a TEFRA Coordinator who supplied technical advice

relating to TEFRA partnerships. She could not possibly have been Mr.

Naporko’s “immediate supervisor” because she did not supervise his

substantive work on the Ivey Branch audit. See Sand Inv. Co., 157 T.C.

at 142 (holding that the “immediate supervisor” is the person who su-

pervises the revenue agent’s substantive work on an examination).

Petitioner asks that we defer decision of this question pending

further discovery to obtain all “documents electronically with metadata

intact.” We are mindful that “summary judgment should not be granted

until the party opposing the motion has had an adequate opportunity

for discovery.” Snook v. Tr. Co. of Ga. Bank of Savannah, N.A., 859 F.2d

865, 870 (11th Cir. 1988). But discovery must be relevant to “the subject

matter involved in the pending case.” Rule 70(b)(1); see Hickman v. Tay-

lor, 329 U.S. 495, 507–08 (1947); Caney v. Commissioner, T.C. Memo.

2010-90, 99 T.C.M. (CCH) 1366, 1368.

9

[*9] The discovery petitioner seeks is irrelevant to the resolution of

the question presented by respondent’s Motion. See Rule 121(e); Caney,

99 T.C.M. (CCH) at 1368 (considering whether “further discovery would

likely yield any fact essential to [the nonmoving party’s] opposition to

the [summary judgment] motion”). The record conclusively establishes

that RA Naporko made the “initial determination” to assert the penal-

ties in question and obtained timely supervisory approval from Ms. Car-

reiro. We have repeatedly held that a manager’s signature on a penalty

approval form, without more, is sufficient to satisfy the statutory re-

quirements. Sparta Pink Prop., LLC v. Commissioner, T.C. Memo.

2022-88, 124 T.C.M. (CCH) 121, 124 (citing Belair Woods, 154 T.C.

at 17); see, e.g., Thompson v. Commissioner, 155 T.C. 87, 93–94 (2020);

Goddard, 124 T.C.M. at 197; Excelsior Aggregates, LLC v. Commis-

sioner, T.C. Memo. 2021-125, 122 T.C.M. (CCH) 292, 294. By propound-

ing discovery seeking communications among members of the IRS exam

team, petitioner seeks improperly to look behind the statements and sig-

natures appearing on the face of the forms. See Sparta Pink Prop., 124

T.C.M. (CCH) at 124; Patel v. Commissioner, T.C. Memo. 2020-133, 120

T.C.M. (CCH) 211, 214; Raifman v. Commissioner, T.C. Memo. 2018-

101, 116 T.C.M. (CCH) 13, 28.

We have regularly decided section 6751(b)(1) questions on sum-

mary judgment on the basis of IRS records and declarations from rele-

vant IRS officers. See, e.g., Sand Inv., 157 T.C. at 142; Long Branch

Land, LLC v. Commissioner, T.C. Memo. 2022-2, 123 T.C.M. (CCH)

1008, 1009. And absent some irregularity in the documentary record,

we have rejected the notion that examining agents and their supervisors

must be subjected to cross-examination. See Thompson v. Commis-

sioner, T.C. Memo. 2022-80, at *8; Raifman, 116 T.C.M. (CCH) at 27–28

(holding that cross-examination “would be immaterial and wholly irrel-

evant to ascertaining whether [the IRS] complied with the written su-

pervisory approval requirement”). There is no irregularity in the record

here, and it conclusively establishes that the requirements of section

6751(b)(1) were met.

To reflect the foregoing,

An order will be issued granting respondent’s Motion for Partial

Summary Judgment.